Rank: Chief Joined: 1/3/2007 Posts: 18,346 Location: Nairobi
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heri wrote:Gatheuzi wrote:heri wrote:S.Mutaga III wrote:heri wrote:S.Mutaga III wrote:After she staying in the sidelines for two months, I have finally decided to invest in stocks once again, because I have spotted a good long term opportunity. My first investment of the year will be Kenya Re, starting Monday. Activity 1: Kenya Reinsurance:- It turns out that having a majority shareholding by uncle Sam has some advantages too. Ironically, unlike in other firms, the government is a good business partner in Kenya Re http://www.businessdaily.../-/4r26sdz/-/index.html . The link reveals that it has guaranteed the business of the reinsurer for the next five years. In addition, the valuation of the counter is very low with a single digit P/E. The FY profits have been growing at a good rate in the last three years and despite the low dividend yield, the counter is a good growth stock. I intend to purchase 10,000 shares on Monday at the current price of 18.55. This will be my first investment in 2015. I will update my next buy if an opportunity arises. Happy Hunting 2015 @Mutaga, from your analysis why does this share trade at such a low PE compared to others in the same sector. 1. High government shareholding 2. Low dividend yield Those are my reasons. You should also note that Kenya Re engages in a special kind of insurance business unlike your typical insurance company. Kenya Re's clients are corporate clients and perhaps investors like businesses whose clients are the mass market AKA Wanjiku. However, the business makes money and I personally hardly care how it makes the money as long as it makes profits every year and its profitability remains in an upward trajectory. I only have a basic understanding of the reinsurance business, nothing beyond the ordinary. Thanks, CIC trades at a PE that is X5 that of Kenya RE and Kennya Re trades at almost a third of the sector PE i know you have said it is not exactly comparable with the other insurance companies i wish we could see how in the past its PE compared with the other insurance companies why does this jubilee government keep such huge shareholding in this company? Past PE's of KRE based on end year prices are;  @Gatheuzi, thanks. I can see the PE has always been at low levels. so am not expecting it to change much unless something changes like the shareholding and dividend yield as indicated above GoK's ownership [& control over key appointments] remains a concern but on all other metrics this is a long-term winner. The question is what discount should we give KenRe coz of GoK's 60% stake? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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